Pest control and cleaning company Rentokil Initial Plc (RTO.L, RTOKY.PK) on Friday reported a pre-tax profit compared with a loss last year, benefited primarily by higher revenues and lower amortisation and impairment costs. Rentokil shares are currently trading up nearly 7% on the LSE.
For the fourth quarter, the West Sussex, UK-based company's profit before taxation from continuing operations, at actual exchange rates, or AER, was GBP 26.8 million, compared to a loss of GBP 6.3 million in the prior-year period. On an adjusted basis, pre-tax profit from continuing operations increased 68.4% at AER to GBP 61.8 million from GBP 36.7 million a year earlier. Adjusted results exclude one-off items and amortisation and impairment of intangibles.
At constant exchange rates, or CER, pre-tax profit from pro forma continuing operations were GBP 22.5 million versus a loss of GBP 8.6 million in the previous year. Adjusted pre-tax profit from pro forma continuing operations were GBP 54.4 million at CER, up 60.9% from GBP 33.8 million last year. Rentokil noted that results at CER have been translated at the full-year average exchange rates for the year ended December 31, 2008.
At AER, revenues from continuing operations for the quarter grew 2.6% to GBP 647.6 million from GBP 631.0 million in the fourth quarter last year. Meanwhile, revenues from pro forma continuing operations at CER dropped 1.4% to GBP 601.4 million from GBP 609.7 million a year ago.
In the third quarter, the company's pre-tax profit from continuing operations, at AER, were GBP 30.0 million, and pre-tax profit from pro forma continuing operations were GBP 24.0 million at 2008 CER. At AER, third-quarter revenues from continuing operations were GBP 622.6 million and revenues from pro forma continuing operations at 2008 CER were GBP 583.0 million.
On a segmental basis, revenues from textiles and washroom services at 2008 CER were up 2.0% to GBP 195.2 million from GBP 191.3 million last year. At 2008 CER, pest control revenues were GBP 96.4 million versus GBP 94.2 million in the 2008-year period, and city link revenues were GBP 100.9 million, up 3.8% from GBP 97.2 million in the prior year.
However, revenues from facilities services at CER fell 8.4% to GBP 150.6 million from GBP 164.4 million in the last-year quarter, and Asia Pacific revenues at 2008 CER for the quarter were GBP 44.5 million, versus GBP 46.3 million in fiscal 2008. At 2008 CER, revenues from ambius division were GBP 30.5 million, down 13.4% from GBP 35.2 million a year ago.
During the three-month period, one-off items incurred by Rentokil were GBP 20.4 million versus GBP 16.4 million at AER in the previous year, and at CER, one-off items totaled GBP 18.7 million as compared to GBP 16.4 million in the same quarter last year.
The company noted that one-off items for the period relate directly to the group's various performance improvement initiatives and mainly consist of redundancy and other reorganisation costs including consultancy, plant and office closure costs net of the profit on sale of certain properties, profit or loss on disposal of businesses that are not classified as discontinued and acquisition integration cost.
Amortisation and impairment of intangible assets for the 2009 fourth-quarter decreased 45.1% at AER to GBP 14.6 million from GBP 26.6 million a year ago, and amortisation and impairment costs at CER were down to GBP 13.2 million from GBP 26.0 million in the comparable period prior year.
For the full year 2009, pre-tax profit from continuing operations at AER more than doubled to GBP 65.0 million from GBP 22.8 million in the last year, and adjusted pre-tax profit from continuing operations at AER were GBP 166.5 million, up 54.30% from GBP 107.9 million in fiscal 2008.
At CER, pre-tax profit from pro forma continuing operations surged to GBP 47.2 million from GBP 22.8 million in the year-earlier period, and adjusted pre-tax profit from pro forma continuing operations totaled GBP 140.1 million as compared with GBP 107.9 million in the 2008-year period.
Earning attributable to the company grew to GBP 47.6 million or 2.63 pence per share from GBP 18.8 million or 1.04 pence per share a year earlier. Profit for the year from continuing operations were GBP 48.9 million or 2.63 pence per share versus GBP 16.4 million or 0.76 pence per share in the 12-month period last year.
Full-year revenues from continuing operations rose 5.0% at AER to GBP 2.53 billion from GBP 2.41 billion in the prior year, while revenues from pro forma continuing operations at CER dropped 2.2% to GBP 2.36 billion from GBP 2.41 billion last year.
Looking ahead, chief executive officer Alan Brown said, "Although we see no easing in economic conditions across most of our markets this year, our objectives are to deliver modest revenue growth, take out more costs and make further improvements in customer service and responsiveness. Above all, in 2010 we intend to lay the foundations for profitable growth in 2011 and beyond."
Further, the board also said it is not recommending the declaration of a final dividend for the full year 2009.
RTO is currently trading on the London Stock Exchange at 126.20 pence per share, up 8.20 pence or 6.95%, on a volume of 10.29 million shares. In the past 52-week period, the stock has been trading in a range of 37.25 pence to 126.80 pence.
In Thursday's regular trading session, RTOKY closed trading at $9.14 per share on the Pink Sheets. In the past 52-week period, the stock has been trading in a range of $2.95 to $9.65.
For comments and feedback: editorial@rttnews.com